On 16 November 2012, the Council for the Development of Cambodia hosted 2nd ASEAN Investment Forum held at Hotel Le Royal. The forum was chaired by H.E SOK Chenda Sophea, Minister attached to the Prime Minister and Secretary General of CDC. Heads of investment promotion agencies from the ASEAN member states participated in this forum. Representatives from investment-related governmental institutions also attended the forum.
As ASEAN directs its efforts to make the region economically integrated as a single market and production base and as a single investment destination, it is confronted with a major challenge of making/keeping the region an “attractive investment destination.” While it has enjoyed increased FDI inflows over the years, a major concern is keeping and sustaining investments into ASEAN, especially in the face of growing competition from other emerging markets.
Clearly, ASEAN has to enhance the investment environment to induce investment flows into the region and boost its attractiveness as a single investment area. “ASEAN Investment Area” as a concept has been conceived as early as the 1990s but evidently it still is a long way to go to forthrightly say that the region has already established itself as an investment unit. The big question and challenge is how to make ASEAN an “integrated single investment area.”
As a way toward the single investment area, ASEAN through the years with and under the precursor agreements of the ASEAN Comprehensive Investment Agreement (ACIA) and ACIA itself, Member States have taken big strides in liberalizing their investment regimes across countries. The streamlining of measures to facilitate entry of investment has certainly contributed to improving the environment but apparently this is not a sufficient condition to entice and induce investors. A number of other factors influence the decision of investors/companies in choosing the location for their investments. Although some activities have been initiated at the ASEAN level, the extent of these is limited and not coherently weaved toward an integrative regional approach and dimension.
The Global Competitiveness Report of the World Economic Forum and the Doing Business publication of the World Bank, as well as other publications and studies have challenged and impelled Member States to undertake reforms and implement measures aimed at improving their economic competitiveness and therefore, at being an attractive investment destination.
The first ASEAN Investment Forum (AIF) in November 2011 emphasized that Member States need to collaborate to promote ASEAN as an integrated investment region based on the collective strengths of the Member States. Along this line, the ASEAN Secretary-General in his 2012 investment report to the Ministers underscored the importance of identifying the common elements among Member States to ensure that regional interventions produce the optimal results for ASEAN.
To provide continuity to the AIF in 2011 and deepen the discussion on these points, the 2nd AIF was held at the side lines ahead of the 21st ASEAN Summit. It forum focused on: (1) the development of an ASEAN FDI agenda and strategy taking into consideration the new economic order and the changing landscape in the region; and (2) the development of a common theme for ASEAN or a message to sell/market ASEAN as product of choice.
ASEAN could build upon the collective strengths of ASEAN and leverage on the common elements among Member States in drawing up the ASEAN FDI agenda and strategy, and ASEAN common theme. ASEAN could utilize the key ASEAN economic agreements, particularly the ACIA, AFAS (ASEAN Framework Agreement on Services), ATIGA (ASEAN Trade in Goods Agreement), the AAMNP (ASEAN Agreement on the Movement of Natural Persons, to be signed in November 2012) and other initiatives (e.g. Master Plan on Connectivity) as building blocks in drawing up a scheme that will promote ASEAN as an integrated investment area.
As a forum among the Heads of the ASEAN Investment Promotion Agencies, the AIF is a good suitable venue for ASEAN to formulate and weave a set of strategic recommendations on how ASEAN could enhance its promotion and facilitation initiatives. At the end, the forum concluded that it was necessary that each Member State identifies five investment sectors to be promoted and that there should be a neutral voice to carry out such promotion.